Prohibition of Riba, Gharar & Maysir in Islamic Banking

What is the technical definition of Riba?

• An increase in a loan transaction or exchange of commodity without giving an equivalent counter-value

• A game of chance or luck where the risks are built into the contract

• A predetermine excess or surplus over and above the loan received by the creditor

• A risk or uncertainty in a contract due to the absence or incomplete ownership

Which verse from the Quran prohibits the consumption of usury (riba)?

• Al-Baqarah: 275

• Ali Imran: 130

• Al-Maidah: 90

• Al-Baqarah: 219

What is the legal basis for the prohibition of Maysir (gambling)?

• Surah Al-Baqarah verse 275

• Surah Al-Maidah verse 90

• Surah Al-Baqarah verse 219

• Surah Al-Imran verse 186

What is the concept of Gharar in Islamic banking?

• Risk or uncertainty in a contract due to the absence or incomplete ownership

• An increase in a loan transaction or exchange of commodity without giving an equivalent counter-value

• A game of chance or luck where the risks are built into the contract

• A predetermine excess or surplus over and above the loan received by the creditor

What is the difference between Riba and Usury?

• Riba involves loans for consumption, while Usury involves loans for production

• Riba is an extra charge imposed on a debtor for productive purposes, while Usury is an extra charge imposed on a debtor for consumption purposes

• Riba is prohibited in Islamic banking, while Usury is allowed

• Riba is an Islamic term, while Usury is a conventional term

Which type of financing facility is based on equity or partnership?

• Leased based financing (ijarah thumma al-bai)

• Sale based financing (BBA)

• Equity or partnership financing (musyarakah mutanaqisah)

• Loan contract

What is the consequence of having Gharar in a contract?

• The contract becomes null and void

• The contract is considered valid

• The contract is subject to additional penalties

• The contract is legally binding

What is the rationale for the prohibition of Riba in Islamic banking?

• To promote economically just and socially fair behavior

• To encourage risk-taking in business engagements

• To ensure the lender benefits from the loan transaction

• To prevent exploitation of borrowers

What is the legal basis for the prohibition of Gharar in Islamic banking?

• Surah Al-Baqarah verse 275

• Surah Al-Maidah verse 90

• Surah Al-Baqarah verse 219

• Surah Al-Imran verse 186

What is the definition of Maysir in Islamic banking?

• Risk or uncertainty in a contract due to the absence or incomplete ownership

• An increase in a loan transaction or exchange of commodity without giving an equivalent counter-value

• A game of chance or luck where the risks are built into the contract

• A predetermine excess or surplus over and above the loan received by the creditor